WEBVTT - Bloomberg Surveillance TV: July 19, 2024

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business App. Daryl Kronk of Wells

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<v Speaker 2>Fargo saying this, as the odds of a Trump presidency increase,

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<v Speaker 2>so do the chances of Republicans keeping the House and

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<v Speaker 2>winning the Senate sectors that are likely to be received

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<v Speaker 2>as winners under a Trump White House, Republican Congress, Our Defense,

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<v Speaker 2>financial services, reads, and traditional energy. Daryl joins us for

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<v Speaker 2>more Darrek and morning, It's got a Sailing Jack. Let's

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<v Speaker 2>start with the energy piece of this perception versus reality.

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<v Speaker 2>When the former president comes in, it's a Droe baby

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<v Speaker 2>trou Should I be buying Genijio running away from it?

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<v Speaker 1>Well, it's interesting It's a great point because during the

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<v Speaker 1>past Trump presidency, energy was one of the worst performing sectors,

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<v Speaker 1>right from a gets standpoint. Ironically, during the Biden administration,

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<v Speaker 1>if you market as of the date of Joe Biden's

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<v Speaker 1>election four years ago, energy has been one of the

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<v Speaker 1>best performing sectors. So there is a little bit of

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<v Speaker 1>a contrarian element there. In fact, it's rivaled tech. Most

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<v Speaker 1>people don't believe this, but you can go back and

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<v Speaker 1>run the numbers that everybody believes Tech has been consumed

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<v Speaker 1>all the oxygen in the room, and the reality is

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<v Speaker 1>energy has done extraordinarily well in the last four years

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<v Speaker 1>since the last election. All that said, I actually do

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<v Speaker 1>believe that we're probably in a secular bowl for energy.

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<v Speaker 1>It's our single biggest and best idea of high conviction

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<v Speaker 1>on the board. And it's not a conviction that we think,

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<v Speaker 1>you know, fades in the next three six nine months.

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<v Speaker 1>We think it's a multi year. You know, the world

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<v Speaker 1>just has too much demand coming out of AI cybersecurity,

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<v Speaker 1>defense spending. Right. I can go down a list of

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<v Speaker 1>inputs coming in to the demand side of energy, and

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<v Speaker 1>we just don't have enough supply. That's just the hard reality.

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<v Speaker 2>We should also say it's odd reality of American politics

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<v Speaker 2>that you can come out and say drill, baby, drill.

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<v Speaker 2>And there are very few progressive Democrats that are willing

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<v Speaker 2>to come out and correct in because the reality for

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<v Speaker 2>them is that actually we've got record output near thirteen

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<v Speaker 2>million pounds a Day's a odd situation, isn't it. They

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<v Speaker 2>almost don't want to talk about it, that we've actually

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<v Speaker 2>got record output in America when it comes to crude, right.

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<v Speaker 3>And it is a sector that also has done very

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<v Speaker 3>well under President Biden, which also gets to this idea

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<v Speaker 3>of how much do you really want to trade the

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<v Speaker 3>politics when they both have had the.

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<v Speaker 2>Same that result, we've been traded the politics the small

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<v Speaker 2>caps as well. You've got rates, you've got earnings, and

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<v Speaker 2>then you've got Donald Trump out of those three right now.

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<v Speaker 2>And I know this is difficult to do, but just

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<v Speaker 2>based on your conversations, what you see in the price

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<v Speaker 2>the rally that we've had over the last week in

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<v Speaker 2>small caps, is it about one versus the other or

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<v Speaker 2>three combined?

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<v Speaker 3>What is it?

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<v Speaker 1>So we've had a lot of conversations that Strategy Committee

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<v Speaker 1>about this, right, because it's to rip your face off

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<v Speaker 1>rally over the last seven to eight trading days, and

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<v Speaker 1>it started with the weak inflation. Then everybody believed the

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<v Speaker 1>Fed was, you know, a go in September, No if

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<v Speaker 1>sands butts and so here comes to the rate cutting cycle.

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<v Speaker 1>And then of course the events over the weekend of

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<v Speaker 1>the attempted assassination put a bid in a Trump presidency

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<v Speaker 1>in a red wave basically, So it's those three combined.

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<v Speaker 1>I would tell you this, John, we're thinking about is

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<v Speaker 1>it a reaction or is it a rotation? Because they're

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<v Speaker 1>two different things. Right, reaction is a short term reaction

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<v Speaker 1>in the last seven eight trading days, right that blows

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<v Speaker 1>through some of the technical resistance levels and everything else.

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<v Speaker 1>Or is it a true rotation where capital is believing

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<v Speaker 1>that small caps can durably outperform over the next you know, six, nine,

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<v Speaker 1>twelve months. We think it's the former. We think it's

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<v Speaker 1>a reaction. At this point. If you look at small caps,

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<v Speaker 1>still forty percent are non earners, as everybody knows. What's

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<v Speaker 1>interesting is if you look at the equity risk premium, right,

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<v Speaker 1>which is just a function of am I getting paid

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<v Speaker 1>to take the risk, It's at an all time low

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<v Speaker 1>on smalls, all time low, right, not like a cycle

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<v Speaker 1>low or anything else. It's an all time low today,

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<v Speaker 1>so you're not getting paid to take the risk. The

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<v Speaker 1>leverage is still high as we know in small caps,

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<v Speaker 1>so as they have to service that debt, right, that's

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<v Speaker 1>hard on their earnings, and the earnings both today and

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<v Speaker 1>going forward are still expected to decelerate relative to large right,

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<v Speaker 1>so the fundamental story is not there now. What can

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<v Speaker 1>change that? What will change that is if the Fed

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<v Speaker 1>cuts rates faster and more than people expect. Because small

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<v Speaker 1>caps are highly indexed to floating rate debt. Almost forty

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<v Speaker 1>forty five percent of their debt is floating rates. So

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<v Speaker 1>if you bring the short side of the curve down quickly,

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<v Speaker 1>that's a big tailwind right to small caps along with

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<v Speaker 1>their highly leveraged so obviously the rates come down, it

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<v Speaker 1>helps them in their business model, margins, earnings and the

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<v Speaker 1>like today bottom line, we still think it's a reaction

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<v Speaker 1>and not a full rotation.

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<v Speaker 3>What about the rest of this market because it's not

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<v Speaker 3>just small caps that did better. It was basically everything

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<v Speaker 3>but big big tit tech just kind of state flat

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<v Speaker 3>is not more enduring that you have a market that

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<v Speaker 3>has maybe gone over at skis with how concentrated it

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<v Speaker 3>is and willing to look elsewhere.

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<v Speaker 1>I think it's a great point, Danny. So you know,

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<v Speaker 1>we are at a little bit of tenuous levels this morning, right,

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<v Speaker 1>the S and P sitting right on top of its

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<v Speaker 1>twenty day support level, but Big Tech more importantly, right

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<v Speaker 1>mag seven top ten names sitting on top of its

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<v Speaker 1>fifty day If it pierces its fifty day support level, right,

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<v Speaker 1>I think some of that selling accelerates to the downside.

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<v Speaker 1>We all know breath has been far too narrow right,

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<v Speaker 1>and that leadership needs to expand. So I would argue

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<v Speaker 1>and postulate that if you can get leadership to expand

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<v Speaker 1>right into financials, into industrials, right into other areas of

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<v Speaker 1>the market, that's actually a healthy thing for markets. We

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<v Speaker 1>know we've had too little leadership that's been too concentrated

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<v Speaker 1>than on a market cap basis has driven that. So

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<v Speaker 1>it's a healthy thing if we can do that. But

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<v Speaker 1>the question is if Because just a week ago before

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<v Speaker 1>we started this rally, the index was set all time

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<v Speaker 1>highs and the number of participants above their two hundred

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<v Speaker 1>day moving average, we're at all time lows in the SMP.

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<v Speaker 2>Right. So here's the thing, I worry about that people

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<v Speaker 2>are pan against a cyclicals just as a cycle is

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<v Speaker 2>starting to turn the wrong way. Isn't that what you

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<v Speaker 2>worry about too?

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<v Speaker 1>It is? I mean, if I was asked this question

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<v Speaker 1>of the to day, you know what would make you

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<v Speaker 1>buy small caps?

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<v Speaker 3>Right?

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<v Speaker 1>Which is a prime beta cyclical? It would be one

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<v Speaker 1>of two things.

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<v Speaker 3>Right.

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<v Speaker 1>Either it has to be price compelling, which to me

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<v Speaker 1>the Russell two thousand probably needs to be at eighteen

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<v Speaker 1>fifty nineteen hundred before you're price compelling. Or I have

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<v Speaker 1>to believe I'm early cycle and not late cycle, and

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<v Speaker 1>all the data tells me that I'm still late cycle. Right,

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<v Speaker 1>If you can convince me I'm early cycle, I'm a

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<v Speaker 1>buyer or small capsule?

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<v Speaker 2>Because I've been asking this question for months, if not

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<v Speaker 2>years now, do you really want to buy the recovery

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<v Speaker 2>to the recession we haven't had?

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<v Speaker 1>That's right? Unless there's compelling evidence there right that we're

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<v Speaker 1>truly that. I guess you can make the case. Here's

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<v Speaker 1>the contrring case. You make the case we soft land

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<v Speaker 1>so you never have the recession. You trough out a

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<v Speaker 1>little bit, and then you reaccelerate hard to the other

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<v Speaker 1>side of which then small caps make sense. I'm a

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<v Speaker 1>little worried that people are jumping on small caps because

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<v Speaker 1>remember small caps did well as we close sixteen and

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<v Speaker 1>early into twenty seventeen on the first Trump presidency. Right,

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<v Speaker 1>so they're replaying the same tape, right, if you will,

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<v Speaker 1>you know Bear Steepener, small caps outperform, you know defense

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<v Speaker 1>financials rates. Yeah, the whole thing is the same playbook.

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<v Speaker 1>If that same playbook doesn't play out in policy, right,

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<v Speaker 1>and what let's say Trump two dot zho comes to fruition.

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<v Speaker 1>If that's how the November election goes, then you've got

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<v Speaker 1>some risk in those trades and they become then the

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<v Speaker 1>reaction and not a durable rotation.

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<v Speaker 3>Well, as we start out this conversation, Darryl, a huge

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<v Speaker 3>part of it is what down ballot races look like,

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<v Speaker 3>what the House and what the Senate look like. Does

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<v Speaker 3>just the fact of Biden being more likely to drop

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<v Speaker 3>out with this pressure make that up in play and

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<v Speaker 3>maybe question some of this rotation.

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<v Speaker 1>Yes, and no. I So our thought all the way

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<v Speaker 1>along is the Senate. Clearly the math is difficult for

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<v Speaker 1>the Democrats to hold the Senate, right, and everybody knows that.

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<v Speaker 1>So it's likely to go GOP. We've often thought the

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<v Speaker 1>House goes the way of executive branch, right, so whoever

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<v Speaker 1>wins the presidency carries the House on their coat tails.

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<v Speaker 1>Right now, you have to think that the the the

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<v Speaker 1>strength has been towards the President Trump and and weakness

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<v Speaker 1>towards uh Biden at least in the intensity of voters

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<v Speaker 1>and what they wanna see. The Democratic Party seems to

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<v Speaker 1>be united around one thing, which is trying to move

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<v Speaker 1>to a different candidate at this point, what if and

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<v Speaker 1>when they do that? The question then becomes can they

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<v Speaker 1>unify from there or does that fracture the party?

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<v Speaker 2>Oh, it's been a massive distraction the focus. I have

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<v Speaker 2>a Whamingley winning in November and not campenting for the

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<v Speaker 2>next four and a half years.

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<v Speaker 1>That's right.

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<v Speaker 2>And policy, let's talk about policy. Let's talk about policy

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<v Speaker 2>a little bit more now it's going to see it. Thanks,

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<v Speaker 2>thank you, sir, Katrina Dampley Franklin Templeton with this to say.

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<v Speaker 2>The biggest issue for investors is the concentration we have

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<v Speaker 2>seen in the market that is driving returns higher but

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<v Speaker 2>with significantly lower breadth. Katrina joins us now for more, Katrina,

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<v Speaker 2>we've been trying to address that over the last couple

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<v Speaker 2>of weeks. Do you think this move that we've seen

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<v Speaker 2>is sustainable.

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<v Speaker 4>I think we hope that is sustainable in terms of

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<v Speaker 4>the rally that we've seen in the small caps. And

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<v Speaker 4>why do we think that? Well, as I said, you know,

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<v Speaker 4>the concentration of the market and the amount of market

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<v Speaker 4>cap that's represented either by the Magnificent seven as we

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<v Speaker 4>call them, or tech generally is in historically very very

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<v Speaker 4>high levels, and we're hoping that some of that can

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<v Speaker 4>put performance can spread into the smaller cap area.

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<v Speaker 1>One of the.

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<v Speaker 4>Reasons that we're actually optimistic is our view on investment

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<v Speaker 4>and investment spending, and we think that that will disproportionately

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<v Speaker 4>benefit the small cap companies over those larger cap names.

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<v Speaker 2>What do you think of earning so far? And maybe

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<v Speaker 2>you can't name specific names, so I can do that

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<v Speaker 2>for us, the likes of Delta United, PEPSI. It doesn't

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<v Speaker 2>sound great on the consumer front, and when I think

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<v Speaker 2>about small caps and I think about regional banks, it

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<v Speaker 2>feels like we're piling into cyclicals at a time that

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<v Speaker 2>some companies are telling us things aren't that great.

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<v Speaker 1>What would you say to that, Katrina this morning.

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<v Speaker 4>Okay, you are absolutely right that we have seen a

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<v Speaker 4>lot of pressure coming from the consumer. But that pressure

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<v Speaker 4>and that concern.

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<v Speaker 5>Is not new.

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<v Speaker 4>We have seen it for many quarters ahead of time,

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<v Speaker 4>and so companies, when you are seeing these trends early,

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<v Speaker 4>can prepare. So we've seen something like a McDonald's talk about,

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<v Speaker 4>you know, bringing down the cost of its offering and

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<v Speaker 4>adjusting to this new reality. And that is positive because

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<v Speaker 4>as long as companies are able to adapt, what we

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<v Speaker 4>see as a negative headline can actually be an opportunity

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<v Speaker 4>for a company to continue develop and move their business forwards. So, yes,

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<v Speaker 4>we are watching the consumer. The second part of that

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<v Speaker 4>is some of the pressure that we're seeing is at

0:10:58.160 --> 0:11:00.760
<v Speaker 4>the lower end of the consumer. So if you rule,

0:11:01.120 --> 0:11:05.640
<v Speaker 4>the bottom forty percent of income earners actually represent less

0:11:05.640 --> 0:11:08.679
<v Speaker 4>than twenty percent of spending. So we need to really

0:11:08.880 --> 0:11:12.520
<v Speaker 4>understand this kind of broad range of spending across our

0:11:12.559 --> 0:11:15.000
<v Speaker 4>economy and who is really driving the numbers.

0:11:15.280 --> 0:11:18.960
<v Speaker 3>I mean, there are pockets, but there are pockets of weakness, Katrina.

0:11:18.960 --> 0:11:20.880
<v Speaker 3>And if you just look at the fun flow, people

0:11:20.920 --> 0:11:23.880
<v Speaker 3>have just been buying outright small cap ets. Big of

0:11:23.880 --> 0:11:26.520
<v Speaker 3>America's latest note says it was the second biggest inflow

0:11:26.600 --> 0:11:29.439
<v Speaker 3>on record over the past week. Do you think there's

0:11:29.440 --> 0:11:31.880
<v Speaker 3>an issue with people just diving into the sector as

0:11:31.920 --> 0:11:33.760
<v Speaker 3>a whole. Do they need to be more picky?

0:11:35.040 --> 0:11:39.120
<v Speaker 4>I like picky investors. They're my favorite type of investors,

0:11:39.200 --> 0:11:43.119
<v Speaker 4>because a picky investor is really saying there are benefits

0:11:43.200 --> 0:11:46.640
<v Speaker 4>to being active and to really understand what you're buying.

0:11:47.000 --> 0:11:50.160
<v Speaker 4>Particularly in the small caps, you're kind of buying a

0:11:50.440 --> 0:11:53.319
<v Speaker 4>basket of everything, and what we're saying is, actually, you

0:11:53.440 --> 0:11:56.439
<v Speaker 4>do need to sort through that basket of stocks and

0:11:56.640 --> 0:12:00.160
<v Speaker 4>identify those companies that are treating a good valuation. And

0:12:00.240 --> 0:12:02.800
<v Speaker 4>that's something I always talk about. Your evaluation is one

0:12:02.800 --> 0:12:05.760
<v Speaker 4>of the key drivers of stock performance. But also you

0:12:05.880 --> 0:12:08.479
<v Speaker 4>want to look and make sure that they've got strong financials,

0:12:08.800 --> 0:12:11.640
<v Speaker 4>that they're not pressured, or that they're prepared for the

0:12:11.760 --> 0:12:14.600
<v Speaker 4>interest rate rises that are in the past but are

0:12:14.640 --> 0:12:17.520
<v Speaker 4>now really starting to come for our financials. So I

0:12:17.600 --> 0:12:20.800
<v Speaker 4>think in the small cap plan, it really does pay

0:12:20.920 --> 0:12:24.000
<v Speaker 4>to be an active investor, because otherwise you're just kind

0:12:24.040 --> 0:12:27.000
<v Speaker 4>of buying what I would call a hodgepodge, but just

0:12:27.160 --> 0:12:30.600
<v Speaker 4>a diverse and a highly varied range of investments.

0:12:30.760 --> 0:12:33.360
<v Speaker 3>But someone to argue Katrina that as long as it

0:12:33.400 --> 0:12:35.599
<v Speaker 3>seems like Trump has good odds to be president, and

0:12:35.720 --> 0:12:37.280
<v Speaker 3>that the FED is going to be cutting rates, that

0:12:37.320 --> 0:12:39.280
<v Speaker 3>there are things that are under love that should be

0:12:39.360 --> 0:12:42.520
<v Speaker 3>going up anyway. Are those two pillars of an argument

0:12:42.600 --> 0:12:44.959
<v Speaker 3>to say maybe you can just buy it regardless that

0:12:45.000 --> 0:12:46.920
<v Speaker 3>they're just so in love that it makes some sense.

0:12:47.920 --> 0:12:51.439
<v Speaker 4>But that idea that just because it was unloved and

0:12:51.600 --> 0:12:54.160
<v Speaker 4>suddenly some macro factors are going to change and that's

0:12:54.200 --> 0:12:56.679
<v Speaker 4>going to make everybody love a stock, I think that

0:12:56.840 --> 0:13:01.600
<v Speaker 4>that's really not understanding the reality of what drivestock performance.

0:13:01.920 --> 0:13:05.679
<v Speaker 4>Because just because people didn't like a company before, if

0:13:05.720 --> 0:13:09.080
<v Speaker 4>you didn't like a buggy whip manufacturer when we had

0:13:09.160 --> 0:13:12.480
<v Speaker 4>that transition to cars, it doesn't matter if we had

0:13:12.800 --> 0:13:15.200
<v Speaker 4>one hundred or one thousand more cars on the road.

0:13:15.280 --> 0:13:17.640
<v Speaker 4>We still don't need those buggy whips. So you really

0:13:17.800 --> 0:13:20.640
<v Speaker 4>need to understand the business. You can't just say that

0:13:20.800 --> 0:13:23.800
<v Speaker 4>because it was I loved yesterday, I've got this positive

0:13:23.840 --> 0:13:26.320
<v Speaker 4>mac or a backdrop that things are going to get better,

0:13:26.400 --> 0:13:28.920
<v Speaker 4>because I just think that that is not the reality,

0:13:29.040 --> 0:13:30.440
<v Speaker 4>particularly in small caps.

0:13:30.640 --> 0:13:32.800
<v Speaker 2>Katrina Well said, it's going to hear from your Katrina,

0:13:32.840 --> 0:13:45.440
<v Speaker 2>don't be there of Franklin Templeton. I think we all

0:13:45.480 --> 0:13:48.120
<v Speaker 2>need to talk about the process as well as Ama

0:13:48.240 --> 0:13:50.480
<v Speaker 2>from the RNC and Marie. Thank you. Let's turn to

0:13:50.600 --> 0:13:52.960
<v Speaker 2>Rob Casey now a signal Global Advisors.

0:13:53.040 --> 0:13:53.160
<v Speaker 4>Rob.

0:13:53.200 --> 0:13:54.599
<v Speaker 2>Great to catch up with you, sir. Thank you for

0:13:54.640 --> 0:13:56.719
<v Speaker 2>being with us before we talk about the process. And

0:13:56.760 --> 0:13:58.640
<v Speaker 2>I'd love your thoughts on the process because you guys

0:13:58.640 --> 0:14:00.880
<v Speaker 2>specialize in this kind of stuff. I want to talk

0:14:00.920 --> 0:14:03.520
<v Speaker 2>about how close we actually are now because it feels

0:14:03.600 --> 0:14:05.280
<v Speaker 2>like you and a team have changed your base case

0:14:05.280 --> 0:14:08.080
<v Speaker 2>about whether President Biden stays in this race. Where are

0:14:08.160 --> 0:14:08.400
<v Speaker 2>we now?

0:14:09.520 --> 0:14:11.319
<v Speaker 5>Yeah, John, we have and thanks for having me on.

0:14:11.679 --> 0:14:13.560
<v Speaker 5>You know, as of yesterday, I think that the tide

0:14:13.640 --> 0:14:16.240
<v Speaker 5>really has turned. Anne Marie totally agree with her. This

0:14:16.320 --> 0:14:19.000
<v Speaker 5>weekend is the most important of Joe Biden's political career.

0:14:19.480 --> 0:14:21.800
<v Speaker 5>The issue for Biden for Democrats is we've essentially had

0:14:21.880 --> 0:14:22.840
<v Speaker 5>three weekends.

0:14:22.520 --> 0:14:24.160
<v Speaker 1>In a row, or three weekends.

0:14:23.840 --> 0:14:26.080
<v Speaker 5>Out of the last four that are the most important

0:14:26.200 --> 0:14:29.760
<v Speaker 5>of Joe Biden's career, after the debate, after the NATO summit,

0:14:30.040 --> 0:14:31.200
<v Speaker 5>and now this weekend coming up.

0:14:31.400 --> 0:14:33.520
<v Speaker 1>We just don't think that that path is sustainable.

0:14:33.560 --> 0:14:36.360
<v Speaker 5>We can't have every weekend the question of whether or

0:14:36.360 --> 0:14:38.360
<v Speaker 5>not Joe Biden is going to drop out. Joe Biden

0:14:38.400 --> 0:14:41.680
<v Speaker 5>can't have it. Senate Democrats, House Democrats, who are running

0:14:41.760 --> 0:14:44.280
<v Speaker 5>very tight races. Nobody can have it. So we don't

0:14:44.280 --> 0:14:49.640
<v Speaker 5>think it's sustainable. Clearly congressional leadership is thinking the same thing.

0:14:49.720 --> 0:14:53.080
<v Speaker 5>Wefer from Chuck Schumer. We've heard from Leader Jeffreyes, We've

0:14:53.080 --> 0:14:55.520
<v Speaker 5>heard from Nancy Pelosi, all of whom you know. It

0:14:55.640 --> 0:14:58.960
<v Speaker 5>seems that they're going more public with further pressure on

0:14:59.080 --> 0:14:59.960
<v Speaker 5>Biden to step aside.

0:15:00.160 --> 0:15:02.520
<v Speaker 2>So let's go to the weekend. Let's assue this happens

0:15:02.600 --> 0:15:04.640
<v Speaker 2>just for the sake of the following conversation. Let's see

0:15:04.720 --> 0:15:07.040
<v Speaker 2>he sits there at the weekend and delivers an address

0:15:07.040 --> 0:15:08.840
<v Speaker 2>to the nation and talks about stepping aside.

0:15:09.080 --> 0:15:09.760
<v Speaker 4>One done.

0:15:10.160 --> 0:15:12.560
<v Speaker 2>What does the process look like going into Walkers rob

0:15:12.720 --> 0:15:15.640
<v Speaker 2>What do market participants in our audience need to think about?

0:15:17.400 --> 0:15:20.920
<v Speaker 5>Yeah? Absolutely, well, I think the first moment after that,

0:15:21.080 --> 0:15:24.200
<v Speaker 5>there's going to be a scramble within the Democratic Party. Obviously,

0:15:24.240 --> 0:15:26.800
<v Speaker 5>everybody's sort of preparing for this behind the scenes. Now

0:15:27.200 --> 0:15:30.000
<v Speaker 5>nobody's able to explicitly prepare for it until it happens.

0:15:30.520 --> 0:15:33.520
<v Speaker 5>We with very high conviction believe that Vice President Kamala

0:15:33.560 --> 0:15:36.760
<v Speaker 5>Harris will be Democrats' plan b Now, it may not

0:15:36.880 --> 0:15:40.880
<v Speaker 5>be that she is immediately coronated or Biden immediately says,

0:15:40.920 --> 0:15:43.720
<v Speaker 5>you know, I'm moving on and handing it to Kamala.

0:15:44.320 --> 0:15:46.000
<v Speaker 5>There's a chance that we have sort of a mini

0:15:46.080 --> 0:15:49.760
<v Speaker 5>contested convention in August, but I think very likely and

0:15:49.960 --> 0:15:53.160
<v Speaker 5>almost immediately it will become clear that the Democrats are

0:15:53.240 --> 0:15:56.320
<v Speaker 5>rallying around and coalescing around Vice President.

0:15:56.080 --> 0:15:57.000
<v Speaker 1>Harris, which they need to.

0:15:57.080 --> 0:16:02.200
<v Speaker 5>I mean, they can't have a contested convention after Republicans had,

0:16:02.320 --> 0:16:05.240
<v Speaker 5>you know, one of the most successful conventions in recent history,

0:16:05.800 --> 0:16:08.520
<v Speaker 5>entirely united around and behind Donald Trump.

0:16:09.280 --> 0:16:11.280
<v Speaker 3>Rob It's a catch twenty two though, because if you

0:16:11.400 --> 0:16:15.920
<v Speaker 3>do have Democrats who are united against United under one candidate,

0:16:16.200 --> 0:16:19.000
<v Speaker 3>presumably Kamala Harris, as you were talking about, then it

0:16:19.040 --> 0:16:21.240
<v Speaker 3>gets back to this criticism that they face before that

0:16:21.280 --> 0:16:25.360
<v Speaker 3>they're running an undemocratic like type process to have their

0:16:25.440 --> 0:16:28.000
<v Speaker 3>candidate up on stage. How do they get around those

0:16:28.040 --> 0:16:29.880
<v Speaker 3>sorts of claims if they do unite under her.

0:16:30.960 --> 0:16:32.680
<v Speaker 5>Yeah, I think it's a fair criticism, and you know,

0:16:32.760 --> 0:16:35.400
<v Speaker 5>I think if we see a kind of backroom deal situation,

0:16:35.880 --> 0:16:38.880
<v Speaker 5>there will certainly be more criticism. I think the way

0:16:39.000 --> 0:16:41.680
<v Speaker 5>for Democrats to get around that is potentially say, Okay,

0:16:41.720 --> 0:16:44.000
<v Speaker 5>we're going to have an open convention. Anyone who wants

0:16:44.040 --> 0:16:45.760
<v Speaker 5>to throw their hat in the ring is more than

0:16:45.840 --> 0:16:48.440
<v Speaker 5>welcome to. But you know, a little bit more privately,

0:16:48.560 --> 0:16:51.880
<v Speaker 5>coming from Biden, Schumer, Jeffreys, Pelosi, that really the whole

0:16:52.000 --> 0:16:56.600
<v Speaker 5>leadership gang a lot of pressure for people to stay

0:16:56.640 --> 0:16:59.400
<v Speaker 5>on the sidelines and let Kamala around her race. We've

0:16:59.400 --> 0:17:02.400
<v Speaker 5>already seen Newsom, governor of California, say that he would

0:17:02.440 --> 0:17:04.919
<v Speaker 5>not throw us hat into the ring. That's a surprise

0:17:05.000 --> 0:17:07.480
<v Speaker 5>given he's essentially been campaigning for president over the past.

0:17:07.320 --> 0:17:08.000
<v Speaker 1>Two or three years.

0:17:09.320 --> 0:17:12.080
<v Speaker 5>We've heard similar from Governor Gretchen Wimmerre and others who

0:17:12.760 --> 0:17:15.520
<v Speaker 5>it seems like they are not incredibly willing to challenge

0:17:15.520 --> 0:17:16.920
<v Speaker 5>Harris in this hypothetical.

0:17:17.040 --> 0:17:18.680
<v Speaker 3>I mean, I can't help but wonder Rob if part

0:17:18.720 --> 0:17:20.000
<v Speaker 3>of that is just they know they're going to walk

0:17:20.040 --> 0:17:22.920
<v Speaker 3>into a very difficult campaign and it might bruise them

0:17:23.119 --> 0:17:24.639
<v Speaker 3>for their chances in four years from now.

0:17:25.840 --> 0:17:26.680
<v Speaker 1>Yeah, I think that's fair.

0:17:26.800 --> 0:17:28.920
<v Speaker 5>I mean, one of the most important aspects that we

0:17:29.000 --> 0:17:32.680
<v Speaker 5>have to remember is the Biden Harris campaign has raised

0:17:32.800 --> 0:17:35.440
<v Speaker 5>hundreds of millions of dollars. They have about one hundred

0:17:35.440 --> 0:17:38.080
<v Speaker 5>million dollars on hand as we speak today, and Harris

0:17:38.119 --> 0:17:40.760
<v Speaker 5>would be able to use that money almost immediately. She

0:17:40.800 --> 0:17:43.600
<v Speaker 5>wouldn't be able to use it immediately, but essentially it

0:17:43.640 --> 0:17:46.880
<v Speaker 5>would be hers should Biden set beside, because her name

0:17:46.920 --> 0:17:49.240
<v Speaker 5>is on the ticket. Newsom's name is not on the ticket,

0:17:49.440 --> 0:17:51.440
<v Speaker 5>Whitmer's name is not on the ticket. All of these

0:17:51.640 --> 0:17:54.960
<v Speaker 5>potential candidates would be phenomenal candidates either in twenty twenty

0:17:55.000 --> 0:17:57.359
<v Speaker 5>four or twenty twenty eight, but they just don't have

0:17:57.440 --> 0:17:59.640
<v Speaker 5>the infrastructure, They don't have the funding available to them

0:18:00.080 --> 0:18:03.040
<v Speaker 5>right now to immediately challenge Harris and then to immediately

0:18:03.160 --> 0:18:03.800
<v Speaker 5>challenge Trump.

0:18:04.359 --> 0:18:05.880
<v Speaker 2>What are you thinking of in terms of a VP

0:18:06.240 --> 0:18:07.240
<v Speaker 2>if it is Kamala.

0:18:07.000 --> 0:18:11.760
<v Speaker 5>Rubb, Yeah, governor and yoursheer from Kentucky, Governor Roy Cooper

0:18:11.800 --> 0:18:16.760
<v Speaker 5>from North Carolina, potentially Governor Jos Shapiro from Pennsylvania. Of course,

0:18:16.840 --> 0:18:18.680
<v Speaker 5>you know, it doesn't think a genius to know that

0:18:18.800 --> 0:18:21.000
<v Speaker 5>the unifying factors among those three and others.

0:18:21.359 --> 0:18:22.960
<v Speaker 1>Moderate white male.

0:18:24.119 --> 0:18:27.520
<v Speaker 5>That is probably a necessity for Vice President Harris, who

0:18:27.880 --> 0:18:31.000
<v Speaker 5>you know herself is not incredibly progressive on policy, but

0:18:31.440 --> 0:18:35.840
<v Speaker 5>whose profile certainly groundbreaking, ceiling shattering, and thus perceived to

0:18:35.920 --> 0:18:37.600
<v Speaker 5>be progressive by many Americans.

0:18:37.720 --> 0:18:39.320
<v Speaker 2>I have a feeling Rub, we might be talking again

0:18:39.359 --> 0:18:41.280
<v Speaker 2>this weekend, so I'm looking forward to that. If we

0:18:41.359 --> 0:18:43.680
<v Speaker 2>have to, Rub, Thank you, sir Rob Casey there of

0:18:43.800 --> 0:18:48.760
<v Speaker 2>Signal Global Advisors. This is the Bloomberg Sevenants podcast, bringing

0:18:48.880 --> 0:18:52.280
<v Speaker 2>you the best in markets, economics, an Giet politics. You

0:18:52.359 --> 0:18:55.119
<v Speaker 2>can watch the show live on Bloomberg TV weekday mornings

0:18:55.160 --> 0:18:58.080
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0:18:58.119 --> 0:19:01.560
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0:19:01.680 --> 0:19:04.480
<v Speaker 2>as always on the Bloomberg Terminal and the Bloomberg Business

0:19:04.560 --> 0:19:04.720
<v Speaker 2>out

0:19:08.680 --> 0:19:09.160
<v Speaker 4>Mm hmm